Digital Innovation and Core Competence of Manufacturing Industry: Moderating Role of Absorptive Capacity

Abstract

ABSTRACT In the digital economy era, traditional manufacturing enterprises face a significant challenge due to fierce competition regarding products, channels, digital technology, management, and core competencies. As a result, many enterprises strive to leverage digital technology to gain new processes, products, services, and business models, thereby enhancing their competitive edge. This paper mainly focuses on how digital innovation based on different value-creation methods can help enterprises build their core competence. Using a sample of 254 questionnaires from manufacturing enterprises in China, this study investigates whether and how efficiency-based, convergence-based, and generativity-based digital innovation supports the development of core competence using ordinary least squares (OLS) regression. Further, this paper examines the moderating effect of absorptive capacity. The empirical results indicate that digital innovation encourages the establishment of core competence, and absorptive capacity strengthens the role of efficiency-based digital innovation but inhibits convergence-based and generativity-based digital innovation. This study contributes to a clearer understanding of the significance of digital innovation for Chinese manufacturing enterprises and provides useful insights for other countries to rethink their innovation models.